By Hailey Konnath

Law360 (September 9, 2020, 10:03 PM EDT) -- A New Jersey gym that has been brawling with the state over COVID-19 restrictions said it should no longer have to pay fines for defying earlier orders in its legal battle with the Garden State, arguing that it's now operating as a gathering place for volunteers for a U.S. Senate candidate's campaign.

Atilis Gym in Bellmawr has spent months battling the state's health commissioner as well as the township, which revoked the gym's license in August after it continued to defy coronavirus-related orders. On Aug. 18, the gym was hit with a $134,000 judgment by a state court judge who slammed the business' "willful and contumacious" defiance during an unprecedented public health crisis.

Since then, Gov. Phil Murphy has signed an executive order permitting gyms to reopen as long as they follow certain COVID-19 requirements, including limiting indoor occupancy to 25%. Following that new guidance, Health Commissioner Judith Persichilli issued a modified closure order permitting the gym to reopen as long as it complies. That order doesn't negate Bellmawr's revocation of the gym's mercantile license, the commissioner noted at the time.

On Aug. 31, Persichilli asked the court for permission to amend the Aug. 18 contempt enforcement order to encompass her latest closure order and continue collecting the contempt order fines.

But Atilis said in Tuesday's opposition that the state is essentially asking for a continual finding of contempt from a wholly new order. The circumstances have changed fundamentally since Aug. 18, and the gym should no longer be required to pay a daily fine of about $15,500 without a new finding of contempt, it said.

"[I]f the court would want to find defendant in contempt, plaintiff would have to seek a new court finding of such," Atilis said in the letter brief.

Notably, Atilis said it is no longer operating as a gym. In early August,  On Aug. 21 the gym became affiliated with Republican Rik Mehta's run for Senate, Atilis said

"Atilis Gym is now an extension of the Rik Mehta for Senate campaign in which persons gather to exercise their constitutionally protected First Amendment rights," the gym said. "Therefore, any fines levied against defendant by way of the court's Aug. 18, 2020, order should be cut off by the Aug. 21, 2020, announcement."

It added that the gym's occupants have changed "from a for-profit business to a politically protected group."

Atilis also slammed the state's 25% capacity limit as "not supported by any quantifiable data." That rule was made without public input and without regard for the Administrative Procedure Act and "is thus arbitrary and capricious," the gym said.

John McCann, an attorney for the gym, told Law360 on Wednesday that Atilis had filed an application for its mercantile license to be reissued.

In the meantime, "if you want to fine people for exercising their First Amendment rights, good luck," he said.

Persichilli's Aug. 31 motion said that Atilis co-owners Ian Smith and Frank Trumbetti  had proudly touted their "wanton non-compliance" with the governor's executive orders, the Department of Health's closure orders and the New Jersey court's enforcement orders on social media. They have removed their doors from the hinges to block any efforts to lock the building, and, later, kicked down a wooden barrier erected over the doorway intended to bar entrance, she said.

"The co-owners and an entourage of supporters remain in the building at all times, including posting individuals and a dog at the entrance overnight," Persichilli said.

The high-profile dispute goes back to May, when Atilis opened in defiance of New Jersey Gov. Phil Murphy's nonessential business ban during the pandemic. Persichilli then launched a state suit and the gym filed its own related federal action. In June, a New Jersey federal judge ruled that the battle belonged in state court.

The governor later eased his restrictions on gyms, saying they could offer "individualized indoor instruction by appointment only where an instructor is offering training to an individual, and the individual's immediate family members, household members, caretakers, or romantic partners," according to a June 26 executive order.

On July 20, New Jersey Superior Court Judge Robert T. Lougy directed Atilis Gym to comply with those modified rules. Four days later, the judge held the business in contempt after the state filed a motion detailing continued noncompliance revealed by health department inspectors and a surveillance team.

Smith and Trumbetti were then arrested July 27 on charges of contempt, obstruction and violation of the New Jersey Disaster Control Act, but were later released.

Shortly after that, the state asked Judge Lougy to impose sanctions for the gym's ongoing non-compliance with the judge's July 24 contempt order. The judge granted that application on Aug. 18.

New Jersey representatives didn't immediately return a request for comment late Wednesday.

New Jersey is represented by Stephen Slocum of the attorney general's office.

The gym is represented by John McCann of the Law Office of John McCann LLC.

The case is Persichilli v. Atilis Gym of Bellmawr, case number MER-C-48-20, in the Superior Court of New Jersey, Mercer Vicinage Chancery.

--Additional reporting by Bill Wichert and Jeannie O'Sullivan. Editing by Peter Rozovsky.

For a reprint of this article, please contact reprints@law360.com.